Telstra says its video business Ooyala is now worth zero – this could have been avoided by focusing on creators

Rock-a-bye baby, on the treetop,

When the wind blows, the cradle will rock,

When the bough breaks, the cradle will fall,

And down will come baby, cradle and all.

If you take it literally, the above lullaby from Mother Goose is a bit sick, isn’t it? However when it comes to Ooyala, the video business that Telstra’s venture capital arm spent nearly $500 million dollars buying between 2012 and 2014, that nursery rhyme is kind of the perfect metaphor for where both companies find themselves today.

The word Ooyala comes from the Indian language Telugu and means cradle. When cofounders Bismerek Lepe, Belsasar Lepe ,and Sean Knapp launched the company in 2007, they explained the name referred to what they hoped the company would eventually be – a cradle of innovation. Although the three founders and initial investors made good money during the acquisition, for Telstra the investment has turned out more like the nursery rhyme.

Ooyala was in no way, shape, or form a dud investment by Telstra.

Yes, the error of building products based on a Flash environment when the web browser community was moving to a new world where HTML was to become the standard for video was a mistake that put Ooyala on the back foot, but the biggest mistake which has seen the value of the company now placed at zero on Telstra’s books was in the marketing of the product: specifically, not realising that by failing to embrace the creator community, the platform was never going to be seen as a YouTube or Vimeo, or even the business-focused Wistia.

Companies like Vimeo and Youtube have built their entire culture around celebrating the creator community on their platforms and the work they create. This approach is also consistent across the board in all marketing campaigns executed, acquisition decisions they have made, and new products and services they launch.

Case in point: OTT.

Over The Top (OTT) is the media practice changing the content distribution game. It allows creators of content to bypass broadcasters, cable networks, and telcos and sell video, audio, and other media services directly to the end user across multiple platforms; it allows individual creators and production companies to keep control of their content, where and how it is seen, and even how it is priced.

Examples of OTT players are Apple TV, Amazon Unbox, Netflix, and Australian offering Stan. Last year Youtube launched Youtube TVbut the service that I believe is really democratising the distribution game for creators at all levels is Vimeo via its Vimeo OTT platform.

In my opinion, it does the best job of walking creators through what the practice is and how it can benefit of them using simple language and recognisable visuals, which makes users comfortable and confident – this all meaning they have created a self-service model that is highly scalable. When you have 70 million creators on your platform to cross sell the service to, it makes sense.

Creators on Vimeo OTT are able to launch their own on-demand subscription service platform as well as create apps for distribution for their content to platforms like iOS, androidtv, fireTV, Roku, Xbox, tvOS, and TIZEN. Vimeo also supports a wide range of pricing models, including the ability to A/B test which works best for your content, meaning creators can do what they do best now in the distribution game: get creative.

Like Vimeo, Ooyala had all the partnerships needed to deliver a complete end-to-end OTT service – it just never spent enough time building a community of the most important people in the content game. The creators.